Notable profits for the buyer who lifted the $4.90 offer for 3,772 Okta (OKTA) Apr-19 80 puts yesterday at 15:15ET when underlying shares were trading at $84.68. Shares closed at $83.92, and the puts at $5.15 for a mark-to-market profit of 5%, or $94K, on the $1848K outlay.

Bearish flow noted in Okta with 5,226 puts trading, or 5x expected. Most active are Apr-19 80 puts and Mar-19 85 puts, with total volume in those strikes near 4,300 contracts. The Put/Call Ratio is 3.73, while ATM IV is up nearly 3 points on the day. Earnings are expected on March 7th.

Catch up on today's top five analyst downgrades with this list compiled by The Fly: 1. CVS Health (CVS) downgraded to Market Perform from Outperform at Wells Fargo with analyst Peter Costa citing its "continued failure" to stabilize its existing businesses, particularly the long-term care business, after two years of pressure. 2. Southwest (LUV) downgraded to Sell from Neutral at Goldman Sachs with analyst Catherine O'Brien saying Southwest's fiscal 2019 pretax margin will decline 60 basis points due to the dilutive impact of its new Hawaii flying and unit cost ex-fuel pressures. 3. Charles Schwab (SCHW) downgraded to Sell from Neutral at UBS, while E-Trade (ETFC) was downgraded to Neutral from Buy. 4. Palo Alto Networks (PANW) downgraded to Hold from Buy at Gabelli with analyst Hendi Susanto citing valuation. 5. Teva (TEVA) downgraded to Neutral from Buy at Mizuho with analyst Irina Koffler saying her investment thesis is "broken" after Teva's "disappointing 2019 guidance and cautious longer-term outlook." This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.

Gabelli downgrades Palo Alto Networks to Hold on valuation. Gabelli analyst Hendi Susanto last night downgraded Palo Alto Networks to Hold from Buy. The analyst cites valuation for the downgrade, pointing out the shares have appreciated from $176 per share, when he published his latest Buy recommendation, to about $230 per share currently. The stock now trades near the analyst's July fiscal 2020 private market value estimate of $227 per share. Susanto, however, continues to maintain a favorable view of Palo Alto's "market leadership, technology platform, and competitive security platform."

Demisto 'strategic and complementary' to Palo Alto Networks, says Jefferies. After Palo Alto Networks announced its intent to acquire security, orchestration, automation, and response company Demisto for $560M in cash and stock, Jefferies analyst John DiFucci said he views this as a "strategic and complementary" deal that positions Palo Alto in the emerging "SOAR" market. However, he noted that one of Demisto's key assets is its ability to integrate with a variety of vendors and be vendor neutral and he questions this neutrality going forward with the company now being part of Palo Alto. DiFucci, who views orchestration solutions as gaining in utility and relevance, keeps a Buy rating on Palo Alto Networks shares.

Palo Alto Networks announced that it has entered into a definitive agreement to acquire Demisto, a security company in the security orchestration, automation and response, or SOAR, space. Under the terms of the agreement, Palo Alto Networks will acquire Demisto for a total purchase price of $560M, subject to adjustment, to be paid in cash and stock. The proposed acquisition is expected to close during Palo Alto Networks fiscal third quarter, subject to the satisfaction of regulatory approvals and other customary closing conditions. The addition of Demisto's orchestration and automation technologies will accelerate Palo Alto Networks Application Framework strategy and serve as a critical step forward in the company's aim to deliver immediate threat prevention and response for security teams. Demisto's automated playbooks have helped reduce alerts that require human review by as much as 95 percent, allowing security teams to focus on the most complex threats. This well-developed approach will bring Palo Alto Networks closer to using AI and machine learning to help further automate significant parts of the company's customers' security operations.

Palo Alto Networks risk/reward remains favorable, says UBS. UBS analyst Fatima Boolani said the wall of worry for Palo Alto Networks is lower and she still likes the risk/reward. She believes the recent management changes have been digested and her survey shows there is a resilient firewall appetite, higher conviction in Cloud growth, and less pessimism on degradation. Boolani reiterated her Buy rating and $250 price target on Palo Alto Networks shares.